This Year Hedge Funds Can’t Compare with S&P 500

A well-known investment banking company took a look at 708 hedge funds to see how they compare with the performance of the S&P 500. Not so surprisingly, all those funds taken together gained on average 4 percent, while the S&P climbed up by a juicy 20 percent.

The 708 funds represented about $1.5 trillion in gross assets: $1 trillion holding long positions and $500 billion betting short. The major contributor to the lackadaisical results was the many misplaced short positions, particularly the bad bets on Netflix and Tesla.

This was just more of what has been going on all year long. As a matter of fact, the 50 stocks with the most short interest are the very ones that rose by an average of 30 percent since the year began. Such wrong bets wiped out any gains which were reaped from the long positions.

Published by PJ Moore

JP has a background in financial planning. He has worked for decades as a financial planner and guide, focusing on large family trusts. He has garnered years of experience understanding hedge funds, private equity, retirement planning and the like and enjoys sharing his advice and thoughts at Hedge Crunch when he comes up for air. Contact PJ at pj(at)hedgecrunch.com.